Asos probes supply chain: Boss raises concerns over sweatshops as online fashion giant reports 10% lockdown sales boost
Sweatshop fears: Asos reported a 10% rise in sales during lockdown
Asos is reviewing its operations in Leicester to avoid being dragged into the sweatshop crisis engulfing rival Boohoo. As the online fashion giant reported a 10 per cent rise in sales during lockdown, chief executive Nick Beighton said he will visit suppliers tomorrow to inspect their factories.
Following allegations that suppliers to Boohoo paid workers as little as £3.50 an hour, factories in Leicester have been accused of failing to protect staff from coronavirus and the city is locked down due to high infection rates. Asos has 173 suppliers at 900 factories in 24 countries, including seven in Leicester working across 30 sites.
One of those factories has been assigned the most serious ‘red critical’ status by internal auditors at Asos, suggesting there were significant gaps in management systems or that workers’ welfare was at risk.
With Boohoo as well as Quiz under fire over working practices at sites in Leicester, Beighton said: ‘I’m very worried about the potential read-across from consumers.
‘I’m visiting Leicester, and I’ll be going to a number of our suppliers, including the red critical factory.
‘We’ll go through the process. That factory will have a mediation plan, and we’ll be judging their performance against that.’
Warning that Asos could end contracts with suppliers that do not ‘do the right thing’, he added: ‘Nothing is foolproof, and when you work closely with suppliers, sometimes I look suppliers in the eye and make a judgement call.’
Between 2013 and 2018 Asos pulled out of 23 factories in Leicester due to a lack of business and concerns over working practices. It also reported issues in Leicester to the mayor Peter Soulsby, according to evidence provided to a committee of MPs.
An insider said the ‘red critical’ factory is facing questions over its handling of data, not working conditions.
Pledge to return furlough cash
Asos has promised to hand back money claimed under the furlough scheme – and will not accept a bonus for bringing staff back to work.
At the start of the lockdown, the fast fashion giant sent around 1,000 staff home via the taxpayer-funded Job Retention Scheme that covered 80 per cent of the wages of furloughed workers.
But it has now said it will hand back the £1.8million it was paid while staff were furloughed in April.
And it also became the latest firm to say it will not take advantage of Chancellor Rishi Sunak’s £1,000 per employee bonus scheme for bringing staff back from furlough.
This would have handed it a further £1million. Cash-rich firms have been urged to hand furlough money back.
Asos said: ‘Asos carries out regular, rigorous, in-depth audits across its global supply chain and works closely with independent auditors, NGOs, unions and campaigning groups.
‘If we find or hear of violations of regulation or law we report these to the relevant enforcement authorities.’
An audit report from May 2018 revealed that a quarter of Asos suppliers, including seven in the UK, had major ethical breaches.
It uncovered problems in 185 sites around the world, around a quarter of suppliers it inspected.
This included seven factories in Britain which were ranked as ‘red’, the second most serious category. One in ten sites worldwide is now considered high-risk.
The revelations came as Asos reported a 10 per cent jump in group sales to £1billion in the four months to June 30. UK sales were down 1 per cent to £329million.
Its shares fell 3.4 per cent, or 116p, to 3489p yesterday.
The fashion sector is under fire over working practices as Boohoo and Quiz faced allegations of underpaying staff and failing to enforce social distancing.
Boohoo has launched an investigation into its supply chain led by a top business crime barrister and promised £10million to clean up its supply chain.
Its shares fell another 3.2 per cent yesterday, taking total losses since the start of last week to 46 per cent. This has wiped £2.2billion off its value, leaving it worth £2.6billion.
Quiz has said that it was ‘extremely concerned’ and had suspended the supplier in question pending further investigations.